Chinese banks buoyant amid market tumult as stock investors hunt for dividend yields
Led by ICBC, CCB, ABC and BOC, 42 mainland-listed banks have gained 19 per cent on average this year, trouncing the benchmark stock index
The 42 mainland-listed banks have gained 19 per cent on average since the start of 2024, according to financial data provider Shanghai DZH. That trounces a 4.2 per cent decline in the benchmark CSI 300 Index in the period.
The so-called big four state-owned banks have led the stellar run. Industrial and Commercial Bank of China (ICBC), the biggest among them, and China Construction Bank (CCB) have both touched levels not seen since 2018, while Agricultural Bank of China (ABC) has risen to a record high and Bank of China has hit the highest share price since 2015.
While banks are typically seen as a proxy for the economy, stable dividend yields against the backdrop of an asset famine are driving their outperformance. China’s patchy economic recovery has prompted investors to pile into bonds, pushing the yield on the benchmark 10-year government debt to a record low of 2.124 per cent this month. That is half the average dividend payout of the big four banks.
“The dividend yields of the big four banks and other banks are very attractive,” said Lin Rongxiong, an analyst at SDIC Securities. “Take the big four banks for example; their dividend yields average about 5 per cent, and the spread between them and the 10-year government bond yield is now at a historically high level.”
ICBC yields 4.7 per cent in dividend payouts and its Shanghai-listed shares have jumped 36 per cent this year. Bank of China, ranked second among the four, has a dividend yield of 4.6 per cent, with the stock surging 28 per cent in 2024, according to Bloomberg data. China Construction Bank and Agricultural Bank of China yield 4.8 per cent and 4.7 per cent, respectively, the data shows.
